How to Buy the Best Homeowners Insurance

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Homeowners insurance is popularly known as Home insurance, an insurance type that provides coverage for your home and property against your any kind of damage or theft. As a matter of fact, many landlords may require their tenants to have renters coverage to protect their personal belongings in the house but you need to have a home before you can get your own Home insurance.   

What is Homeowners Insurance

Homeowners insurance is a type of property insurance that offers coverage for the covered loss and damages done to your home. This includes furniture, TV, computers, and many more in your home. Since Homeowners is a form of property insurance, it also provides liability coverage for accidents in your home. Plus, other personal asset damages, interior and exterior damages.

In case, an unforeseen event happen, you can make use of your liability limit in your homeowner insurance policy to know the amount of coverage the insured person has. However, it is important to shop around for quotes from different insurance companies to know the best homeowners insurance company you can work with that suits your budget.

How Does Homeowners Insurance Work

A homeowners insurance policy offers coverage for four types of events on your insured property. They include loss or damage of personal assets, interior damage, exterior damage, and injury caused by the property. When you file a claim as a result of any these happenings, the insurance company will reimburse you but you will also be required to pay a deductible out of your pocket for the insured person who can either be you or any other person affected by this event.

Take for instance, if a claim that is filed to an insurance company for interior water damage that happened in your home. Your claim adjuster assigned to you by the insurance company will estimate the cost or replacement or repairs of the property. Let’s say the estimated cost of repairs is $12,000 and if the claim is approved, and you as the homeowner is informed that your deductible is $5,000 based on your policy agreement. The insurer will reimburse with a payment of $7,000 having deducted your deductible. Keep in mind that higher deductible makes you enjoy the insurance companies’ discount by giving you a room to save money on your monthly or annual premium. This is because the higher your deductible, the lower your monthly or annual premium on your home owners insurance policy.

Every homeowners insurance policy has a liability limit, a maximum amount your insurer agrees to pay as a result of a single accident or injury done to your property. This will help you know the amount of coverage you have if you are the insured person. This also determines the percentage of the amount of your coverage that will cater for the expenses of the repairs for the damages done to your property structure, cost of you and your family if you live in another place while you home is undergoing repairs, and personal belongings.

Home owners insurance policies does not cover perils like earthquake, floods and many more dangerous earthly natural disasters events. If you want coverage for flood and earthquake especially if your area is prone to natural disaster, you will need to contact your agent for special coverage on your property or home insurance policy. 

What Does Homeowners Insurance Policy Covers

  • Interior and Exterior damage done to your House from fire, vandalism, lightning or other covered disasters. Other covered things like furniture, clothing, and electrical appliance are also covered.
  • Personal Liability for Damage or Injuries: these provide liability coverage for damages to other people in your home. This usually happens when the injured person files a lawsuit against you for damages to them while in your apartment.
  • Hotel or House Rental: your insurance company will pay for your hotel room, restaurant meals and many other costs you incur while your home is being repaired. It is sometimes regarded as additional living cost.

What Homeowners Insurance Does not Cover

Homeowners insurance policies does not cover some natural disasters event like earthquake, flood and many other disasters. Although, homeowners insurance naturally covers hurricanes, tornadoes, but does not cover natural disaster like flood and earthquake, if you want your policy to cover the flood and earthquake, you can meet your agent and apply for additional policy for earthquake and flood insurance.

Major Types of Homeowners Coverage

There are three levels of coverage for Homeowners insurance coverage. They include;

  • Actual cash value: this covers the cost of your house and the worth of your belongings after subtracting depreciation.
  • Replacement cost: This provides coverage for the actual cash value of your home and your belongings without subtracting depreciation so that you can repair or rebuild your home up to the original amount.
  • Guaranteed (or extended) replacement cost/value: this is regarded as inflation-buffer policy. It provides coverage more than the amount you purchased it. This coverage will pay for any cost or whatever it costs to rebuild or repair your home such that the amount can be more than your policy limit but the downside is that you may have up to 20% to 25% higher than the limit of your coverage.

How to Buy Cheap Homeowners Insurance Policy

There are a few ways you can cut down the cost of your Homeowners insurance policy especially if you want to get a cheaper coverage.

  • Get Higher Deductibles – Higher deductibles gives you lower monthly or annual premium. This will help you save more money monthly or annually.
  • Multiple Discount policy: some insurance companies offer you multiple discount policies if combine two different policies coverage in your purchase. For example, if you buy auto and home insurance policies, you are likely to get discounts on your coverage.
  • Clear off your mortgage
  • Plan Ahead for Renovation
  • Install security devices in your home: when you have security monitoring devices in your home like smoke alarms, sprinklers systems and many more. You stand the chance to getting discounts on your coverage.

How to Compare Homeowners Insurance Companies

When you are shopping for the best homeowners insurance company that can meet your budget, it is important you put some factors into some considerations.

  • Compare various insurance companies and their cost
  • Check various insurer’s claim response
  • Check for customer’s satisfaction
  • Compare various insurance quotes from different insurers
  • Speak to an agent who deals with multiple insurance companies
  • Do a company health check by using the various scores of A.M. Best, Moody’s, J.D. Power, Standard & Poor’s. This will give idea on consumer complaints against the companies as well as general customer feedback, the processing of claims, and other data. You can make your findings from the National Association of Insurance Commissioners and Weiss Research.